FXstreet.com (Barcelona) - The August 1 FOMC minutes revealed that “many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery”, confirming that the FOMC “delayed extending its guidance language to the September meeting so they can first see their updated forecasts”, in the opinion of BofA Merrill Lynch experts.
Now with the GDP at 1.75% (Fed 2.2 to 2.7% for the year), unemployment turning back upward and soft inflation, Merrill Lynch analysts expect the FOMC to “move its guidance out to mid-2015, but more likely a full year to at least late 2015”and are uncertain about QE3: “If the data continue to surprise to the upside, we would expect QE3 to be delayed to either the October 24 or more likely the December 12 meeting”, wrote analyst Ethan S. Harris, seeing “50% chance of additional QE at the September meeting, but about an 80% of QE before year-end”.
Now with the GDP at 1.75% (Fed 2.2 to 2.7% for the year), unemployment turning back upward and soft inflation, Merrill Lynch analysts expect the FOMC to “move its guidance out to mid-2015, but more likely a full year to at least late 2015”and are uncertain about QE3: “If the data continue to surprise to the upside, we would expect QE3 to be delayed to either the October 24 or more likely the December 12 meeting”, wrote analyst Ethan S. Harris, seeing “50% chance of additional QE at the September meeting, but about an 80% of QE before year-end”.
